Former investors in Allan Hubbard's Aorangi Securities and Hubbard Management Funds will have to chase the deceased Timaru businessman's estate if they want to pursue as much as five years of unpaid interest after the entities' statutory managers and regulator didn't think it worth their time, according to reports on the now-completed administration.

The previously unseen detail has emerged in documents released to BusinessDesk under the Official Information Act by the Ministry of Business, Information and Employment.

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Grant Thornton's Trevor Francis, Richard Simpson and Graeme McGlinn wrapped up their statutory management of the Hubbard-related entities in September last year when they repaid 300 or so investors in HMF the $36.5 million principal invested.

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That followed the completion of the Aorangi administration in 2014 where about 400 investors were repaid 99 percent of their principal, or $101.2 million, something the Companies Office thought unlikely when they considered extending the statutory management to South Canterbury Finance in 2010.

While that left investors in both entities short-changed with unpaid interest, the statutory managers decided not to pursue action against the Aorangi directors, despite believing there were "significant breaches of the Securities Act 1978 and of their duties under the Companies Act," they said in a May 2014 report to the Companies Registrar.

We expect any claim made by us would be strongly defended and it would be an extremely costly claim to pursue.

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"It would have significantly delayed distributions to the investors and would have had an uncertain return even if we were successful in obtaining judgment."

A July 2014 MBIE report went on to say the statutory managers elected not to proceed after being advised there was no directors' and officers' insurance cover and that the directors' assets were held in trusts.

The statutory managers said Aorangi investors were owed about $36.2 million in unpaid interest, and that they understood many investors placed claims against Allan Hubbard's estate.

Virtually all HMF investors suffered a shortfall against what Allan Hubbard had reported to them and investors could have lodged a claim against Hubbard's estate for those losses, the statutory managers said in an August 2015 report.

The statutory managers had a tumultuous relationship with the investors, saying they had to call the police after being harassed by investors who rallied behind Hubbard as a prominent figure in the South Canterbury community.

The documents also detail their deteriorating relationship with Allan Hubbard before his death, telling the Companies Registrar in September 2010 that the financier was trying to run his affairs as though he wasn't under statutory management.

It would have significantly delayed distributions to the investors and would have had an uncertain return even if we were successful in obtaining judgment.

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Former Commerce Minister Simon Power appointed the statutory managers in mid-2010 after an anonymous complaint was laid by an investor claiming they hadn't seen a prospectus for their investment in Aorangi.

The appointment controversially left out Hubbard's primary entity, South Canterbury Finance, which ultimately cost the taxpayer an upfront bill of $1.7 billion when it failed, triggering a claim against the retail deposit guarantee scheme established by the government in response to the 2008 global financial crisis. When it started becoming apparent South Canterbury Finance was heading for failure, Treasury officials were of the view statutory management was cheaper than receivership and was a better avenue to unpick the related party exposures of Hubbard's empire.

Hubbard faced fraud charges over his management of Aorangi, which were later dropped when he died in a car accident in 2011.

In the statutory managers' first report in September 2010, they said Hubbard had indicated several times he was attempting to register a prospectus for Aorangi, holding his first discussions with Covenant Trustee Co in 2005. A later report in 2012 said Hubbard had transferred assets to Aorangi to strength the company's balance sheet in preparation to register a prospectus, though the transactions were ultimately "flawed".

By the time the managers filed their final report in 2014, they said while Hubbard had investigated and been advised on Aorangi's requirements under the Securities Act, "he had not acted on that advice at the time of our appointment."

The Grant Thornton partners said they also talked with the Financial Markets Authority, which considered taking action before deciding "on public interest grounds not to prosecute a claim."

The FMA supported the Serious Fraud Office's case against South Canterbury Finance's largely unsuccessful prosecution of the lender's former directors Ed Sullivan and Bob White, and ex-chief executive Lachie McLeod. It later chose not to pursue a civil case against the lender's directors over cost, and said Crown Asset Management was better placed for any further recovery given the majority of investors had been covered by the deposit guarantee scheme.

The July 2014 MBIE report also said the the Registrar of Companies could take administrative action against those directors, and a ministry spokesman told BusinessDesk it imposed four-year bans on former Aorangi directors Duncan Brand and John Stark on Sept. 3 last year. They have both appealed their prohibitions to the High Court, which has yet to hear their case.